CUSTOMatrix™ Insights Newsletter

Which ERP is Right for you?

Robin Sutton-Brown, Principal, CIO Services, CUSTOMatrix, Inc.

If you know what ERP stands for you know about the bitter battles between the product giants, SAP and Oracle.  But when it comes to selecting the system to run your business, it is not enough to know just these players.  

The two best known ERP vendors would like you to think that they are the only two players that should be considered when choosing an ERP, but the truth is very different.  The ERP market is at least two decades old and is composed of many capable vendors.  The ERP market grew out of the Materials Resource Planning (MRP) products of the 70’s and 80’s by replacing the “M” in MRP with “Enterprise”  to reflect the broader scope for this breed of applications.  Now the market is composed of dozens of players.  Some have been around for many years while others have arrived on the market recently.  Some are still in the process of migrating from older technology while others have taken advantage of the latest technologies such as .NET and SOA to quickly develop very flexible solutions.    This market is as rich as ever with the large players developing versions for the Mid-market to Small-market, while some of the Small-market players have been growing their products to meet the Mid-market needs. 

While there are many capable vendors in the Mid-market space, they are far from on equal footing.  Based on their own product documentation, it is not possible to know how strong their functionality is in any particular area.  For example, they may indicate coverage in all areas, but only have deep functionality in some areas like HR, Inventory or Finance while they are only newcomers in Manufacturing and Sales as they all try to fulfill the promise of an “Enterprise” offering. 

With this proliferation of players, it becomes increasingly important to way the offerings of each against your companies requirements, especially if you don’t have six to eight million dollars to put down on your next infrastructure project.  Selecting the correct vendor offering is a moving target as each player is continually positioning itself in the market place against each other.  Some would have you believe that you can simply build a large spreadsheet of desired features and start checking the boxes.  However, checking the boxes from the vendor’s literature or product documentation is misleading or at best, inconclusive.  The truth is that when you try to match the ERP offerings today against the needs of a business, you had better know a great deal about both!  There are literally hundreds if not thousands of factors that go into running a business effectively and any of those could be critical to your business.

So what about Oracle or SAP?  Well, some have taken the approach that if I select one of the top tier players, and pay the $M price tag, I can be sure that this choice will meet my needs.  But will it?  Each of the tier 1 players migrated through their own evolution and has their own limitations.  They each come with a footprint that is somewhere on a continuum from light to very heavy and that footprint may be crushing to your business.  To counter this concern, you can have the application hosted by the vendor or a third party. This “On-Demand” model is a popular offering to offset the complexity of managing your own system in house.  However, this is not the biggest part of the Total Cost of Ownership (TCO).  The largest part of the impact of an ERP system is the functional fit with your business and this is as varied as there are ERP vendors and companies that need them.

So what is the answer?  Start with requirements!  Spend the time to know your business, know what processes are critical to your business success and which must be finely tuned for success.  Also know where your business is going.  What are you going to need in two, three or five years?  Having help in requirements gathering is critical.  One very common mistake is to assume that since a business process is commonplace in your business it is standard in the ERP you are considering.  These unstated requirements need to be surfaced and tested prior to selection.

The next most important step is to know your vendor.  This is more easily said than done.  Each viable vendor has a large customer base which they are trying very hard to keep by meeting customer needs with annual or semi-annual product improvements.  Each vendor is vying for new customers by demonstrating they have the staying power and the functionality to meet their customer needs and that they provide these features with better services, ease of use and lower cost of ownership than their competition.  You can be sure that this year’s competitive edge is a standard feature in next year’s product offering. 

So how does the potential customer know what vendor is best for them?  Most ERP purchasers may never know whether they purchased the best choice for them.  Most often they only know the shortcomings of their ERP system after they have purchased it, implemented it, and are financially committed to their selection.  This is why it is critically important to obtain help from experienced consultants who can guide you through the selection with a sound methodology.   The ERP selection experts at CUSTOMatrix are experienced, vendor neutral and you can be confident that you will be matching your requirements with the best ERP system or systems to meet your needs. 

What is the cost of not making the optimal choice?  Project failure, early replacement, burdensome processes, people cost, customer loss or loss of business.    Any of these can make the cost of an ERP selection mistake a significant loss for your business. 

Authored by Robin Sutton-Brown, IT consultant with over 30 years experience in IT management, systems selection, design, and implementation. He has worked with or consulted with such firms as Cymer, Unisys, Kyphon and TrellisWare. He is currently working as a Principal in the CIO Services practice for CUSTOMatrix.

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